President Donald Trump reportedly issued a sweeping executive order Thursday aimed at reining in two dominant financial firms he says are weaponizing their influence to force racial quotas, climate activism, and other left-wing priorities onto American corporations. The order singles out Institutional Shareholder Services (ISS) and Glass Lewis, the two proxy advisor firms that together control more than 90% of the U.S. proxy advising market.
Proxy advisors hold enormous sway over how major shareholders vote on corporate proposals — from climate commitments to board diversity mandates — and Trump made clear he believes that power has been abused to advance ideological agendas rather than shareholder returns.
“These proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ — even though investor returns should be the only priority,” Trump wrote in the order.
He pointed to examples: ISS and Glass Lewis have both supported shareholder proposals demanding racial equity audits, greenhouse-gas reductions, and assessments of climate-related oversight. Glass Lewis recommends voting against corporate boards lacking at least one member from what it calls an “underrepresented community,” defined as non-white individuals or sexual minorities. It also urges votes against companies that fail to disclose how their boards oversee climate change issues.
ISS uses similar standards, including recommending votes against boards with no women or no racial or ethnic diversity, and penalizing companies that do not meet what it describes as “minimum steps” on climate-related risk management.
Trump argued these practices distort markets, undermine fiduciary duty, and burden corporations with politically driven demands. “Their practices also raise significant concerns about conflicts of interest and the quality of their recommendations,” he wrote, calling for aggressive action to restore “accountability, transparency, and competition” in the proxy advisor industry.
The executive order directs the Securities and Exchange Commission chair to review all proxy-advisor-related regulations, particularly any tied to DEI or ESG mandates. It instructs the Federal Trade Commission to support state investigations into potential unfair trade practices by ISS and Glass Lewis. It also orders the attorney general and labor secretary to examine proxy advisors’ broader influence over American companies.
The order arrives amid mounting legal pressure on the two firms. Last month, Florida Attorney General James Uthmeier sued ISS and Glass Lewis, accusing them of violating state antitrust provisions and the Florida Deceptive and Unfair Trade Practices Act. Both companies are already under investigation by the FTC for how they advise clients on climate and social policies.
The scrutiny is not new. In August 2023, the House Judiciary Committee launched a probe into ISS and Glass Lewis, investigating their partnerships with climate-activist organizations and their push to “decarbonize” corporations through the shareholder-voting process.
Trump’s directive signals the most significant federal challenge yet to the ESG-driven influence these firms wield — and reflects a broader effort by the administration to defend shareholders, businesses, and the American economy from political activism disguised as financial guidance.
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